top of page

Josep Borrell - Russia's foreign exchange reserves to be seized to fund Ukraine's rebuilding

To help pay for the cost of rebuilding Ukraine, Europe is increasingly considering seizing frozen Russian foreign exchange reserves.

Josep Borrell, the European Union's Foreign Policy Commissioner, has cited the United States' seizure of billions of dollars in assets belonging to the Afghan central bank as an example of what Europe should do. The funds were used to potentially compensate terrorism victims as well as provide humanitarian aid to the country.

Similar steps with Russia's reserves, according to Borrell, would be logical to compensate Ukraine and rebuild its infrastructure and economy.

EU officials have been looking into whether Russia's reserves could be used in the Ukraine reconstruction effort, but Brussels has yet to make any policy recommendations on the subject.

In an interview, Borrell, who is known in Brussels for his solo runs, mentioned the idea as one of several ways Russia could be persuaded to contribute.

In an interview with the Financial Times, Borrell said, "I would be very much in favor because it is full of logic."

"We have the money in our pockets, and someone has to explain to me why it is good for the Afghan money and not good for the Russian money."

Given the "incredible amount of money" that would be involved, Borrell said one of the key political questions was how to pay for Ukraine's reconstruction. He wanted to see a discussion about how Russia could ensure "war compensations."

Significantly, no one in Borrell's college of commissioners colleagues has yet to contradict him.

According to the European Commission, the cost of reconstruction could reach hundreds of billions of euros, with Europe expected to shoulder a significant portion of the burden.

President Joe Biden of the United States has proposed that oligarchs' seized assets be sold to help rebuild Ukraine, a suggestion made by European Council President Charles Michel last week.

The money could be seized and used to rebuild Ukraine, according to US Treasury Secretary Janet Yellen. She stated that it was not something to be taken lightly and that it could only be accomplished with the help of allies.

Hundreds of billions of dollars in foreign exchange reserves held by the Russian central bank have been frozen by the EU, US, UK, and allies in Canada and Japan.

The central bank sanctions, Russia said in March, had frozen about $300 billion of its gold and forex reserves, which totaled more than $600 billion.

Officials from the Commission have been looking into ways to make this more legally straightforward, but the issue is complicated by the need to uphold due process and avoid trampling on people's legal rights.

Asset seizures are sometimes possible after a criminal conviction, but that requirement would not be met simply by sanctioning someone.



bottom of page